While recent earnings reports from Intel (INTC), International Business Machines (IBM) and Microsoft (MSFT) have been above estimates or inline, comments from all three that the anemic economic backdrop looks to limit growth has gotten a rather bearish reaction from investors and weighs on equities again this morning.
Further comments last night out of Advanced Micro Devices (NYSE:AMD) $7.20 after its quarterly earnings report that saw losses widen to the bottom line of $-0.68 per share, which was well below consensus for a loss of $0.43 per share that weaker demand for flash memory points to weaker-than-expected handset sales sent the stock skidding to $6.41 over the New York ECNs, and weighs on the semiconductor sector this morning.
Investors and traders are looking at a lower open this morning as overnight losses have been extended with S&P futures (sp03h) currently trading down 9.2 points to 907.30. NASDAQ futures (nd03h) are lower by 20 points at 1,044.50 and Dow futures (dj03h) are off 80 points at 8,620.
Fair value for the S&P 500 today is $0.21 and S&P futures are well below that level this morning. HL Camp & Company has their computers set for program buying at $0.52 and set for program selling at $-1.76.
Last night in after-hours trading I was monitoring the NASDAQ-100 Index Tracking Stock (AMEX:QQQ), which finished the regular session at $26.43 and then trade down to today's pivot analysis S1 of $26.13. Current pre-market trade has the QQQ at $25.91 and now looks to have potential to today's S2 of $25.82. Any alert to strength today can now be monitored by traders at QQQ $26.13, or today's pivot of $26.55.
The U.S. Dollar is skidding to new lows as depicted by the U.S. Dollar Index (dx00y) 100.47 -0.31%, which is a dollar-weighted index that measures the U.S. Dollar against a basked of 7 foreign currencies. The euro spiked to $1.0668 on tensions over Iraq and yesterday's revelation by U.N. weapons inspectors of 11 chemical warheads. In a sign of safe-haven currency moves, the Australian dollar jumped to a 29-month high versus the dollar.
Also in defensive fashion, U.S. Treasuries are seeing buying across all maturities with the 10-year March futures contract (ty03h) 113'220 +0.34% rising above its 21-day SMA this morning, which to me has the major indexes vulnerable to their 21-day SMAs. The benchmark bond's YIELD ($TNX.X) is falling back near the 4% level and currently trading with a 4.02% yield. I view a close much below the 3.955% yield as near-term negative and a yield close below the recent double-bottom relative lows of 3.775% from November 12 and December 31 having equities further vulnerable as a lower yield from the Treasuries would only be caused by cash flowing away from equities and back toward bonds.
NASDAQ-100 Index Tracking Stock (QQQ) - Daily interval
NASDAQ-100 Index (NDX.X) and QQQ bulls are going to be tested this morning and in last night's after-hours session, the QQQ was trading at today's daily pivot analysis R1 level of $26.13. The daily interval chart above shows converging moving averages in the 21-day, 50-day and 200-day, which gives the QQQ a look of shorter-term up (21-day), intermediate-term up (50-day), but longer-term down (200-day).
The above retracement was "fitted" on the QQQ, just as we showed in yesterday morning's 09:00 update with the NASDAQ-100 Index (NDX.X) itself and we can see how the 38.2% retracement of $26.18 has come into play in recent months.
"Pressure" should be building from traders as upward and downward trends form a rather "BIG wedge" and similar to technical noted in the S&P 100 Index (OEX.X) with what looks to be an apex of 460 in that index, we also see a similar apex in the QQQ at $26.18. From the daily chart, this $26.18 level currently acts like a gravitational point for the QQQ.
While the NASDAQ-100 Bullish % ($BPNDX) saw a net gain of 1 stock to a reversing point and figure buy signal, which has the bullish percent edging up 1% to 65% and tells us that underlying strength is still found form the internals, traders need to monitor MSFT from time to time as it carries such a large weighting in the QQQ and NASDAQ-100 Index (NDX.X) itself. In July of last year, MSFT was under some extreme selling from $54 down to $42, while the NASDAQ-100 Bullish % was rising, only when MSFT rebounded in late July did the NASDAQ-100 Index and the QQQ respond.
Last night (as I write) MSFT last traded at $53.64 and at these levels will have broken below its 21-day and 50-day SMA's. Traders may want to set an alert on MSFT at $52, which is where Microsoft's 200-day SMA is trying to round flat.
As it relates to MSFT and its 21-day and 50-day SMA's, the QQQ and NDX currently look vulnerable to their 21-day SMA's of $25.84 and 1,040. Both of these levels are very close to today's daily pivot analysis S2 support levels of $25.82 and 1,042.
Last night's conference call was a bit confusing when Microsoft was giving its future guidance and after-hours trading reflected this. As such, be alert today, especially early in the morning if holding open positions long or short in MSFT, the NDX or QQQ.
In last night's after-hours trading, MSFT ranged from $57.69 to $52.58, while the QQQ ranged from $26.76 to $26.10.
Reminder that markets are closed Monday
I also want to remind traders that the markets are closed on Monday in observance of Martin Luther King Jr.